Failure to File Penalty on No Balance Owed?

[North Atlantic]

I failed to file my 1040 tax return for 2016, but I did make a payment on April 15 which was for more than the full amount ultimately due.

The return was needed so there is failure to file, but can they assess a fine since the tax was paid?

And is it the same process at the State (NY) level?

 

[Just Blue]

I failed to file my 1040 tax return for 2016, but I did make a payment on April 15 which was for more than the full amount ultimately due.

The return was needed so there is failure to file, but can they assess a fine since the tax was paid?

And is it the same process at the State (NY) level?

I'll tag @Taxing Matters , a site vetted Tax Attorney, to help you.

 

[Taxing Matters]

I failed to file my 1040 tax return for 2016, but I did make a payment on April 15 which was for more than the full amount ultimately due.

The return was needed so there is failure to file, but can they assess a fine since the tax was paid?

The way it works for the federal return is that if you did not have a balance due on the original due date of the return (April 15) then there is no failure to file or failure to pay penalty assessed. So, for example, if you would have had a refund of $500 had you filed on 4/15/17 (the due date of the 2016 return) then there is no late filing/late payment penalty assessed. However, if you do not file that return by 4/15/20 you would lose that $500 refund. So if you are due a refund on that return, get it filed by mailing it so that it is postmarked by 4/15/20 or you'll lose that refund.

And is it the same process at the State (NY) level?

From what I can see from a quick look at the NY Department of Taxation and Finance penalty page it works the same way as the the IRS does for late filing and late payment penalty — that is, if there was no balance due as of the due date of the return then there is no penalty.

 

[North Atlantic]

Thank you for the reply. Just to be clear, I did have a balance owed and estimated that amount which I paid on time. I did not file the return on 4/15/17 (failure to file) but instead filed it in 2020 and the amount owed is less than I paid 3 years ago

 

[Taxing Matters]

Thank you for the reply. Just to be clear, I did have a balance owed and estimated that amount which I paid on time. I did not file the return on 4/15/17 (failure to file) but instead filed it in 2020 and the amount owed is less than I paid 3 years ago

Again, the issue is whether you had a balance due as of April 15. If you paid whatever tax you owed on April 15 then you did not have a balance due owed. So if you figured you might owe $1,000 and paid that on April 15, 2017 and then when you actually prepared the return you found out you overpaid by $250 because your actual tax was only $750 then there is no penalty because there was no balance due and owing on the due date of the return. In short, you count all the payments made up to and including April 15 to determine if there is a balance due.

 

[North Atlantic]

Understood, thank you. So even though I failed to file there is effectively no penalty since such fine is predicated on an outstanding amount being owed

 

[LdiJ]

I failed to file my 1040 tax return for 2016, but I did make a payment on April 15 which was for more than the full amount ultimately due.

The return was needed so there is failure to file, but can they assess a fine since the tax was paid?

And is it the same process at the State (NY) level?

There are no penalties for filing late, if you were due a refund. However, if you are due a refund you will want to get the return filed ASAP. Although the IRS has also extended the opportunity to get a refund until 7/15/2020 for 2016 (came out in an IRS notice yesterday) once we are past 7/15/2020 the opportunity will be lost.

 

[davew9128]

Were there any informational forms for ownership of foreign businesses required to be attached to the return?

 

[North Atlantic]

Were there any informational forms for ownership of foreign businesses required to be attached to the return?

No, there was no ownership of foreign business involved.

But, I do have a twist to ask about. Lets say that 2015 was also not filed and a more substantial sum was owed but no payment was made. Would the IRS apply the 2016 payment to 2015 in priority, triggering a failure to pay to penalty in 2016?

 

[LdiJ]

No, there was no ownership of foreign business involved.

But, I do have a twist to ask about. Lets say that 2015 was also not filed and a more substantial sum was owed but no payment was made. Would the IRS apply the 2016 payment to 2015 in priority, triggering a failure to pay to penalty in 2016?

They would not normally do that, unless you goofed and did not designate on your check that it was for a specific year. They would however, take any refund you might get for 2016 and apply it to 2015.